On December 22, 2015, MIGA issued guarantees covering equity investments by Azura-Edo Ltd of Mauritius in, and non-shareholder loans from Standard Chartered Bank (as agent for a consortium of lenders) to Azura Power West Africa in Nigeria. The guarantees are for a period of up to 15 years against the risks of transfer restriction; war, terrorism and civil disturbance; expropriation; and breach of contract. Hedging instruments by Standard Chartered and Rand Merchant Bank are also covered against the risk of breach of contract.
The project consists of the construction of a 459-megawatt greenfield open-cycle gas turbine power plant, with an option to extend to a 670 megawatt combined-cycle plant. The project is the first phase of a planned circa 1,000 megawatt power facility. The plant will be built on the outskirts of Benin City in Edo State near the Escravos Lagos Pipeline System pipeline, which is the major gas distribution pipeline in Nigeria. The plant is one of a number of independent power producers (IPPs) that are required to deliver the government’s Roadmap for Power Sector Reform, which stipulates that the majority of the country’s new power generating capacity must come from IPPs.
Although Nigeria is one of the largest oil producers in the world and has the eighth largest gas reserves, more than half of its people lack access to electricity. Even when power is available, recurrent power outages continue to force industrial and residential consumers to install and run costly power generators. A reliable, affordable, and sustainable supply of power is essential for Nigeria to emerge as a G20 country and achieve the objectives outlined in its own long-term development plan, Vision 2020.
The project is aligned with the World Bank Group’s country partnership strategy for Nigeria, which calls for the use of Bank Group financing and guarantee instruments to support the government’s reforms. The project is also aligned with MIGA’s strategic priorities of supporting investments in complex infrastructure projects and into countries eligible for concessional lending from the International Development Association.